A national developer said Monday that his company will build a 35-story luxury JW Marriott hotel and a separate office tower in a fast-changing part of downtown Nashville.
The $350 million project, developed and owned by Turnberry Associates, will transform land across the street from Music City Center, the massive convention center that opened in SoBro last year.
In an interview Monday, Turnberry executives revealed two significant changes to their development since it wasfirst announced back in the summer.
One is Turnberry's decision to build a 400,000-square-foot office building, instead of prior plans for a tower of 250 high-end condos. It's been seven years since the Nashville market had so little top-grade Class A office space available to rent, according to the latest research from the brokerage firm Cassidy Turley.
The other major change involves the full-service hotel. Turnberry boosted the number of rooms, from 450 to somewhere between 500 and 600. That's important because city officials have said some potential conventions are bypassing Nashville because there aren't enough nearby rooms at full-service hotels.
At 35 stories, the JW Marriott will be the tallest building in Nashville — two stories taller than the iconic AT&T tower, also called the Batman Building for its twin spires that resemble the comic-book hero's mask.
"We've got our hand on the pulse of this market, and I believe Nashville is ready to make the next step. We will build one of the tallest and most iconic buildings in Nashville," said Jeffrey Soffer, chairman and CEO of Turnberry.
Construction is set to begin in summer 2015, with the buildings set to open in the second half of 2017.
"Nashville has a lot of heritage and history, and it has evolved. It's not a country-bumpkin town, it's a real city. You can see that transformation downtown. All the ingredients are here," Soffer told me.
Turnberry, headquartered in Miami, has developed more than $7 billion of real estate nationwide. Turnberry is the majority owner of two Nashville hotels: the historic Union Station, the city's revitalized former train station, and also the Hilton Downtown Nashville. The Hilton opened about 15 years ago, and just finished undergoing a $30 million renovation.
"We will deliver a higher level of service and quality that you'd expect to see in an international city. Nashville is becoming just that," said Ray Waters, chief of Turnberry's hospitality division. Waters, now based in Florida, spent most of his nearly four-decade career in Nashville.
Soffer said the switch from condos to office space reflects the surging demand for downtown offices in Nashville. Waters said the office and hotel will feed off of each other better than how a hotel-condo duo would have fared.
"My first gut was to go residential. I've done lots of high-end condos, and I probably will do a tower in this city someday," Soffer said. "But we decided long-term, office was the right play. Real estate takes time to cultivate; this costs us money, yes, but long-term we will reap the rewards."
The JW Marriott will include two fine-dining restaurants that are new to Nashville; Soffer declined to reveal those tenants. One restaurant will be located on that top 35th floor of the hotel tower.
Turnberry is under contract to buy 3.7 acres at the corner of Demonbreun Street and Eighth Avenue South. The land is currently owned by the United Methodist Publishing House, which is relocating to MetroCenter, north of downtown.
Soffer said he expects to acquire the property in the spring. He declined to disclose the purchase price.
Construction will involve 1,200 workers. The hotel will employ between 550 to 650 full-time employees, Waters said.
Some other hotels tied to Music City Center's convention business have sought aid from the Metropolitan Development and Housing Authority to help finance the work. The Omni Nashville Hotel is one such example, as is a 452-room Westin planned on the land next door to the Turnberry site.
In exchange for that aid, the hotel developers have struck room-block agreements with Metro government. The Westin's agreement states that the hotel must make up to 80 percent of its inventory available to large conventions that city officials book three years in advance. For conventions booked two years in advance, the potential Westin must commit as many as half its rooms.
Soffer said Turnberry neither needs nor wants such aid, which is called tax-increment financing, abbreviated as TIF.
"There is a lot of baggage with that. Obviously, we got TIF with the Hilton, but there was nothing here back then," Soffer said. "With a hotel of this caliber, we need flexibility with who we can put in there. If there's better, higher-paying business out there, we want to be able to book it."
Added Waters: "We are builders and owners. We keep our assets a very long time; we're not looking to build and flip it to someone else. So we take a much longer view of our operations."
Written by Adam Sichko
Article from Nashville Business Journal